Amex launches rewards-based blockchain test with Boxed

American Express is putting its involvement in the Hyperledger Project to the test, deploying blockchain technology with Boxed to enable the digital warehouse merchant to customize a rewards plan for Amex cardholders.

The test at Boxed will eventually expand to other retailers to create tailored offers to the Amex Membership Rewards program through those merchant platforms, but monitored and managed by Amex through private blockchain channels.

Andrew Harrer/Bloomberg

American Express joined the global cross-industry Hyperledger Project early last year as a premier member, a move seen as a way for the card brand to more effectively advance blockchain technology in financial services and have it in place as the Internet of Things advanced into more consumer-facing products and embedded payments. When Amex joined Hyperledger, the project had more than 100 companies and organizations involved as members.

At Boxed, which provides an e-commerce site for business owners and organizations to purchase bulk goods, the testing of blockchain will allow Amex to create a private channel for the merchant's information transfer. This allows merchants to create "smart contracts" that will automatically fulfill rewards programs offers, the company said this week.

Once offers are made to cardholders, the smart contracts will automatically pass anonymized information on the transaction to American Express and the private blockchain channel. Anonymized information cannot be tracked back to an individual cardholder if it were obtained through a breach.

The new technology will also allow merchants to establish offers to cardholders quickly. The process of onboarding a merchant and establishing a rewards program would take only weeks, as opposed to months, Amex said.

Because the offers "live" on blockchain, Amex is able to view current offers so as to regulate the products and brands being promoted to ensure they are in line with the brand values and merchant agreements.

During this testing phase, Amex Rewards cardholders will receive five times the Membership Rewards points on select brands and products.

The testing of customized rewards programs for Amex cardholders comes just over a month after the company dropped its plastic card-based Plenti multi-merchant rewards program, which it ran for just more than two years. Plenti officially ends July 10, but the program saw retailers dropping out for the past several months.